AMSTERDAM, Feb. 10 /PRNewswire-FirstCall/ -- Core Laboratories N.V.
(NYSE: CLB) reported fourth quarter 2009 earnings per diluted share
(EPS) of $1.25, excluding $0.13 EPS related to devaluation of
assets in Venezuela and other foreign currency exchange losses and
$0.12 due to a change in Mexico's tax laws. Fourth quarter 2009 net
income was $23,617,000, and revenue totaled $181,599,000, a
sequential quarterly increase of 8% and a decrease of less than 10%
from the year-earlier quarter. Operating income, excluding the
effects of devaluation of assets in Venezuela and other foreign
currency exchange losses was $47,198,000, yielding operating
margins, defined as operating income divided by revenue, of 26%.
Free cash flow (FCF), defined as cash from operations minus capital
expenditures, was $29,700,000 for the fourth quarter of 2009. As
reported last quarter, the Company has established an internal
performance target of achieving, every quarter, a return on
invested capital (ROIC) in the top decile of the 31 companies
listed as its Bloomberg Peers. Based on Bloomberg's calculations
for the third quarter of 2009, which is the latest comparable data
available, Core's ROIC was the highest of the oilfield services
Peer Group and more than three times its average. For the fourth
quarter of 2009, Core's Reservoir Description operations, which
focus on international crude-oil-related projects, posted
sequentially higher quarterly revenue but modestly lower
year-over-year quarterly revenue and operating income. Large-scale
core analysis and reservoir fluids projects continued in the
deepwater areas offshore West Africa and Brazil, as well as in the
offshore and onshore areas in the Middle East and Asia Pacific.
Production Enhancement operations, with more exposure to North
American markets, posted an excellent quarter, with sequential
quarterly increases in revenue, operating income, and operating
margins. The Company's HERO(TM) line of perforating systems
continued to increase market penetration, and Core's fracture
diagnostics technology is becoming an important component for
successful multistage well stimulations and completions. Reservoir
Management operations, internationally focused like Reservoir
Description operations, reported fourth quarter 2009 revenues,
operating income, and operating margins that were higher than
similar third quarter 2009 totals. Reservoir Management continues
to benefit from increased interest in large, integrated
petrophysical, sedimentological, mineralogical, and geochemical
datasets from prospective pre-salt and post-salt reservoirs and
crude oils along both South Atlantic offshore margins. For all
operations in 2009, Core reported revenue of $695,539,000, down 11%
from 2008, and net income of $113,604,000. The Company reported
2009 diluted EPS of $4.87, down from $5.48 in 2008. Excluding the
impact of the devaluation in Venezuela, other foreign exchange
gains, a settlement of a contingent liability, and the change in
effective tax rate, Core's full year 2009 adjusted diluted EPS was
$4.95. Free cash flow for the year totaled a record $164,584,000,
or $7.06 per diluted share, an increase of over 32%, or
$40,300,000, over 2008 levels. On 14 January 2010, Core's Board of
Supervisory Directors (the "Board") approved a 20% increase to the
next quarterly dividend scheduled for distribution the first
quarter of 2010. In addition, on 10 February 2010, the Board
approved a 2-for-1 stock split of Core's issued common shares,
pending shareholder approval of the proposal and all relevant
amendments to the Company's articles of association at the upcoming
Annual Shareholder Meeting scheduled for 13 May 2010. The Board's
resolution approving the stock split projects a record date for the
stock split of 30 June 2010 and a payment date on or about 7 July
2010. Segment Highlights Core Laboratories reports results under
three operating segments: Reservoir Description, Production
Enhancement, and Reservoir Management. Reservoir Description
Reservoir Description operations reported quarterly revenue of
$107,457,000, up 6% over third quarter 2009 totals, but down 1%
from fourth quarter 2008 totals. Year-over-year quarterly operating
income, excluding the effects of devaluation of assets in Venezuela
and other foreign currency exchange losses decreased 4% to
$25,958,000, while margins were 24%. Because of the Company's
multiyear de-emphasis on Venezuelan operations, the total impact of
the recent devaluation of the bolivar was only about $2,700,000, of
which $2,400,000 was related to Reservoir Description operations.
Core intends to further downsize Venezuelan operations. Reservoir
Description results were underpinned by large-scale core analysis
and reservoir fluids phase-behavior projects, along with crude oil
testing, inspection, distillation, fractionation, and
characterization studies that continued in key international
markets. Especially active were both pre-salt and post-salt
reservoir and crude oil studies in the deepwater offshore West
Africa and eastern Brazil. Middle East projects of note continued
for several Iraqi fields, as did studies of reservoir rocks and
fluids from Kuwait, Qatar, Saudi Arabia, and the United Arab
Emirates. Results from these studies will be used to maintain or
boost current production capacities. Production Enhancement
Production Enhancement operations posted fourth quarter 2009
revenue of $61,140,000 and operating income of $17,706,000,
yielding margins of 29%. Fourth quarter revenue, operating income,
and margins all increased from third quarter 2009 levels primarily
because of increased market penetration by the Company's HERO(TM)
High Efficiency Reservoir Optimization line of perforating systems,
increased demand for Core's proprietary and patented fracture
diagnostics technology, and increased activity in North America.
Core's HERO(TM), SuperHERO(TM), and SuperHERO Plus+(TM) perforating
systems now make up over 60% of all systems manufactured and sold
by the Company. The superior perforating technology results in
higher initial hydrocarbon flow rates and enhanced ultimate
hydrocarbon recovery from the reservoir. Moreover, HERO technology
is proving to be effective not only in North American tight-gas
sand and gas-shale reservoirs, but also in carbonate and
conventional clastic reservoirs in the Middle East and Asia
Pacific. Core's SpectraChem® Plus+ fracture diagnostics technology
is proving to be important to successful multistage well
stimulation and completion programs. SpectraChem® Plus+ datasets
enable operators to determine which horizontal stage or stages have
not been effectively stimulated in wells containing up to 30 frac
stages. In addition, laboratory-based cation exchange analysis
datasets can be used to help determine whether frac stages have
contaminated fresh water aquifers, a subject currently under
industry debate. Reservoir Management Reservoir Management
operations posted fourth quarter 2009 revenue, operating income,
and operating margins that were sequentially higher than similar
totals from the third quarter of 2009. Revenue reached $13,002,000,
and operating income was $4,160,000, yielding operating margins of
32%. Reservoir Management has completed, or continues to work on,
eleven large-scale regional pre-salt and post-salt reservoir and
crude oil studies for both offshore South Atlantic margins. These
studies evaluate the pre-salt and post-salt reservoir potential and
the geochemistry of crude oil sourced from pre-salt lacustrine
carbonates and shales and post-salt marine-deposited shales. Core
currently has plans to add more regional studies on both South
Atlantic margins in response to increasing oil company requests.
Return On Invested Capital As reported in the third quarter of
2009, the Company has established an internal performance target of
achieving an ROIC, every quarter, in the top decile of the 31
companies listed as its Bloomberg Peers. The Company believes that
ROIC is a leading performance metric used by shareholders in
determining the relative investment value of publicly traded
companies. Further, the Company believes its shareholders will
benefit if it consistently performs at the highest ROIC levels
among its Bloomberg Peers. According to financial information from
Bloomberg, Core Laboratories' third quarter 2009 ROIC was the
highest of any of the oilfield service companies listed and was
more than three times the Peer Group average. Several other Peer
companies failed to post ROIC that exceeded their weighted average
cost of capital, thereby destroying capital and shareholder value.
Third quarter 2009 results were the most recent available from
Bloomberg for the entire oilfield sector. Peer companies listed by
Bloomberg include Halliburton, Dril-Quip, Superior Energy Services,
Schlumberger, Tidewater, Carbo Ceramics, Oil States International,
Baker Hughes, BJ Services and Key Energy Services, among others.
Core will compare oilfield services sector returns for the fourth
quarter 2009 in its first quarter 2010 earnings release. Free Cash
Flow, Share Count, Share Repurchase Program, Cash, and Quarterly
Dividend For the fourth quarter of 2009, Core generated
approximately $37,000,000 in cash from operations and had
$7,300,000 in capital expenditures, yielding a free cash flow of
almost $29,700,000. Free cash flow for 2009 reached approximately
$164,600,000, or $7.06 per diluted share, both all-time highs for
any full year of cash generation. Core's 2009 average outstanding
diluted share count of 23,328,000 is one of the lowest in over a
decade. Due to continued increases in the Company's share price,
Core increased its GAAP-reported diluted share count during the
fourth quarter as a result of its outstanding Senior Exchangeable
Notes (the "Notes"), of which $239 million remain outstanding.
Core's average share price for the quarter was approximately
$109.00, which exceeded the Notes' conversion strike price of
$93.00. Therefore, a proportionate number of shares was added to
the GAAP diluted share total for future settlement of the Notes,
which mature in 2011. Core added approximately 385,000 shares to
its diluted share count, which will be more than offset by the
approximately 687,000 shares purchased during the first quarter of
2010 under the Company's Share Repurchase Program. No new shares
were actually issued by Core in the quarter, and the actual
issuance of any new shares related to the Notes will not occur
until the Notes' settlement. Year-end cash balances reached
$181,000,000, or $7.65 per diluted share, the highest
quarter-ending level ever reported by Core. In addition,
indebtedness, net of cash, was reduced to $58,000,000 from the
year-ago total of $203,000,000, a decrease of $145,000,000, or
nearly 72%. Net debt-to-capitalization at year end was less than
9%. On 24 November 2009, the Company continued its quarterly cash
dividend of $0.10 per share. Dutch withholding tax was deducted
from the dividend at a rate of 15%. On 14 January 2010, the
Company's Board approved a 20% increase to the next quarterly
dividend scheduled for distribution the first quarter of 2010. The
Board is confident that the Company's free cash generation is more
than adequate to support the quarterly dividend increase to $0.12
per diluted share. Proposed Stock Split On 10 February 2010, Core's
Board approved a 2-for-1 stock split of Core's issued common
shares, pending shareholder approval of the proposal and all
relevant amendments to the Company's articles of association at the
upcoming Annual Shareholder Meeting scheduled for 13 May 2010. The
Board's resolution approving the stock split projects a record date
for the stock split of 30 June 2010, payable on or about 7 July
2010. The stock split will be effected by the issuance of one
common share for each common share held. After the stock split, if
approved by the shareholders, Core will have approximately
47,000,000 diluted shares outstanding. Core believes this action
will eventually lead to increased trading volume of CLB shares,
while increasing share liquidity. Currently, the Company trades an
average of approximately 210,000 shares per day on the NYSE. Q1
2010 Earnings Guidance For the first quarter of 2010, Core expects
revenue of approximately $180,000,000 and EPS between $1.20 and
$1.25. The midpoint of this guidance would result in operating
margins of approximately 26%. In general, the Company believes that
activities, workflows, and operating margins outside North America
will increase 5% to 10% in 2010 and that North American activity
levels will increase in response to moderately increasing natural
gas prices. In addition, the North American rig count is
increasing. This first quarter 2010 guidance excludes any gains or
losses that may originate from the repurchase of outstanding debt,
any effects of foreign currency translations, and assumes an
effective tax rate of approximately 31% to 32%. In addition, first
quarter 2010 EPS guidance does not consider shares that may be
repurchased by the Company or shares that may be added to the share
count relative to amounts outstanding on Core's Senior Exchangeable
Notes. The Company is unable at this time to provide 2010 full-year
guidance with a high degree of confidence. Adjustment to Senior
Exchangeable Notes Exchange Rate The dividends described herein
will result in an adjustment to the Exchange Rate on our Senior
Exchangeable Notes. The new exchange rate will be 10.8120 per
$1,000 principal amount of the outstanding notes and is effective
26 January 2010. The Company has scheduled a conference call to
discuss this quarter's earnings announcement. The call will begin
at 7:30 a.m. CST on Thursday, 11 February 2010. To listen to the
call, please go to Core's website at http://www.corelab.com/. Core
Laboratories N.V. (http://www.corelab.com/) is a leading provider
of proprietary and patented reservoir description, production
enhancement, and reservoir management services used to optimize
petroleum reservoir performance. The Company has over 70 offices in
more than 50 countries and is located in every major oil-producing
province in the world. This release includes forward-looking
statements regarding the future revenues, profitability, business
strategies and developments of the Company made in reliance upon
the safe harbor provisions of Federal securities law. The Company's
outlook is subject to various important cautionary factors,
including risks and uncertainties related to the oil and natural
gas industry, business conditions, international markets,
international political climates and other factors as more fully
described in the Company's 2008 Form 10-K filed on 20 February
2009, and in other securities filings. These important factors
could cause the Company's actual results to differ materially from
those described in these forward-looking statements. Such
statements are based on current expectations of the Company's
performance and are subject to a variety of factors, some of which
are not under the control of the Company. Because the information
herein is based solely on data currently available, and because it
is subject to change as a result of changes in conditions over
which the Company has no control or influence, such forward-looking
statements should not be viewed as assurance regarding the
Company's future performance. The Company undertakes no obligation
to publicly update any forward looking statement to reflect events
or circumstances that may arise after the date of this press
release. CORE LABORATORIES N.V. & SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (amounts in thousands, except per
share data) (Unaudited) Three Months Ended Twelve Months Ended 31
December 31 December 31 December 31 December 2009 2008 2009 2008
-------- -------- -------- -------- REVENUES $181,599 $201,188
$695,539 $780,836 OPERATING EXPENSES: Costs of services and sales
120,565 130,194 457,769 514,782 General and administrative expenses
7,777 9,341 30,372 31,646 Depreciation and amortization 6,181 5,696
23,818 21,773 Other expense (income), net 2,800 3,542 (3,202) 5,580
----- ----- ------ ----- OPERATING INCOME 44,276 52,415 186,782
207,055 Gain on repurchase of senior exchangeable notes - 2,829 -
2,829 Interest expense 3,988 4,235 15,523 21,610 ----- ----- ------
------ INCOME BEFORE INCOME TAX EXPENSE 40,288 51,009 171,259
188,274 Income tax expense 16,511 15,732 57,164 56,766 ------
------ ------ ------ NET INCOME 23,777 35,277 114,095 131,508 NET
INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST 160 59 491 342 ---
--- --- --- NET INCOME ATTRIBUTABLE TO CORE LABORATORIES N.V.
$23,617 $35,218 $113,604 $131,166 ======= ======= ======== ========
Diluted Earnings Per Share: $1.00 $1.51 $4.87 $5.48 ===== =====
===== ===== WEIGHTED AVERAGE DILUTED COMMON SHARES OUTSTANDING
23,677 23,289 23,328 23,944 ====== ====== ====== ====== SEGMENT
INFORMATION: Revenues: Reservoir Description $107,457 $108,730
$414,934 $435,425 Production Enhancement 61,140 75,439 230,652
293,017 Reservoir Management 13,002 17,019 49,953 52,394 ------
------ ------ ------ Total $181,599 $201,188 $695,539 $780,836
======== ======== ======== ======== Operating income (loss):
Reservoir Description $23,415 $24,175 $106,421 $101,783 Production
Enhancement 17,706 21,266 65,076 93,025 Reservoir Management 4,160
5,946 14,620 16,224 ----- ----- ------ ------ Subtotal 45,281
51,387 186,117 211,032 Corporate and other (1,005) 1,028 665
(3,977) ------ ----- --- ------ Total $44,276 $52,415 $186,782
$207,055 ======= ======= ======== ======== CORE LABORATORIES N.V.
& SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (amounts
in thousands) (Unaudited) ASSETS: 31 December 2009 31 December 2008
---------------- ---------------- Cash and Cash Equivalents
$181,045 $36,138 Accounts Receivable, net 133,758 144,293
Inventories, net 32,184 34,838 Other Current Assets 43,550 20,376
------ ------ Total Current Assets 390,537 235,645 Property, Plant
and Equipment, net 98,784 103,463 Intangibles, Goodwill and Other
Long Term Assets, net 168,845 182,427 ------- ------- Total Assets
$658,166 $521,535 ======== ======== LIABILITIES AND SHAREHOLDERS'
EQUITY: Accounts Payable $33,009 $41,588 Other Current Liabilities
73,399 54,102 ------ ------ Total Current Liabilities 106,408
95,690 Long-Term Debt and Lease Obligations 209,112 194,568 Other
Long-Term Liabilities 60,888 42,992 Shareholders' Equity 281,758
188,285 ------- ------- Total Liabilities and Shareholders' Equity
$658,166 $521,535 ======== ======== CORE LABORATORIES N.V. &
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (amounts
in thousands) (Unaudited) Twelve Months Ended 31 December 2009
---------------- CASH FLOWS FROM OPERATING ACTIVITIES $181,873 CASH
FLOWS FROM INVESTING ACTIVITIES (18,540) CASH FLOWS FROM FINANCING
ACTIVITIES (18,426) ------- NET CHANGE IN CASH AND CASH EQUIVALENTS
144,907 CASH AND CASH EQUIVALENTS, beginning of period 36,138
------ CASH AND CASH EQUIVALENTS, end of period $181,045 ========
Non-GAAP Information Management believes that the exclusion of
certain income and expenses enables it to evaluate more effectively
the Company's operations period- over-period and to identify
operating trends that could otherwise be masked by the excluded
items. For this reason, we used certain non-GAAP measures that
exclude these items; we felt that presentation provides the public
a clearer comparison with the numbers reported in prior periods.
Reconciliation of Operating Income (amounts in thousands) Three
Months Ended 31 December 2009 (Unaudited) Reservoir Description
Consolidated ----------- ------------ Operating income $23,415
$44,276 Devaluation related to Venezuela and other foreign exchange
losses 2,543 2,922 ----- ----- Operating income excluding specific
items $25,958 $47,198 ======= ======= Three Months Ended 31
December 2008 Reservoir Description ----------- Operating income
$24,175 Foreign currency loss 2,975 ----- Operating income
excluding specific items $27,150 ======= Reconciliation of Earnings
Per Diluted Share (Unaudited) Three Months Ended Twelve Months
Ended 31 December 2009 31 December 2009 ----------------
---------------- Earnings per diluted share $1.00 $4.87 Devaluation
related to Venezuela 0.12 0.12 Other foreign exchange (gains)
losses (net of tax) 0.01 (0.05) Gain on settlement of a contingent
liability - (0.11) Mexico tax rate adjustment 0.12 0.12 ---- ----
Earnings per diluted share excluding specific items $1.25 $4.95
===== ===== Computation of Cash per Diluted Share (amounts in
thousands, except per share data) (Unaudited) 31 December 2009
---------------- Cash and cash equivalents $181,045 ========
Weighted average diluted common shares 23,677 ====== Cash per
diluted share $7.65 ===== Free Cash Flow Core uses the non-GAAP
measure of free cash flow and free cash flow per diluted share to
evaluate its cash flows and results of operations. Free cash flow
and free cash flow per diluted share are important measurements
because it represents the cash from operations, in excess of
capital expenditures, available to operate the business and fund
non-discretionary obligations. Free cash flow and free cash flow
per diluted share are not measures of operating performance under
GAAP, and should not be considered in isolation nor construed as an
alternative to operating income, net income, earnings per share, or
cash flows from operating, investing, or financing activities, each
as determined in accordance with GAAP. You should also not consider
free cash flow and free cash flow per diluted share as a measure of
liquidity. Moreover, since free cash flow and free cash flow per
diluted share are not measures determined in accordance with GAAP
and thus are susceptible to varying interpretations and
calculations, free cash flow and free cash flow per diluted share
as presented may not be comparable to similarly titled measures
presented by other companies. Computation of Free Cash Flow
(amounts in thousands, except per share data) (Unaudited) Three
Months Twelve Months Twelve Months Ended Ended Ended 31 December 31
December 31 December 2009 2009 2008 ------------ ------------
------------- Net cash provided by operating activities $36,959
$181,873 $155,207 Less: capital expenditures (7,295) (17,289)
(30,950) ------ ------- ------- Free cash flow $29,664 $164,584
$124,257 ======= ======== ======== Weighted average diluted common
shares 23,677 23,328 23,944 ====== ====== ====== Free cash flow per
diluted share $1.25 $7.06 $5.19 ====== ===== ===== DATASOURCE: Core
Laboratories N.V. CONTACT: Richard L. Bergmark of Core
Laboratories, +1-713-328-2101, Fax, +1-713-328-2151 Web Site:
http://www.corelab.com/
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